The revised backpacker tax was announced last week, but what about superannuation? While agriculture groups praised the Federal Government for its decision to abandon a proposed 32.5 per cent tax on working holiday makers (WHMs), in favour of a 19pc rate, some have questioned backpackers' rights to claim retirement contributions.
WHMs receive income and superannuation guarantee contributions at 9.5pc of their income.
WHMs can access their superannuation only when they leave the country, because they do not have the right to retire in Australia and receive the Old Age Pension, according to the Treasury.
Superannuation payments to departing WHMs are currently taxed at an effective rate of about 47pc of the Departing Australia Superannuation Payment (DASP).
Last week's WHM visa changes will see that increase to 95pc from July 1, 2017, to help offset some of the cost of their reduced income tax rate.
Some submissions to the federal government's WHM visa review on the tax suggested the majority of the superannuation is not claimed by WHMs upon leaving the country.
The review's submissions also included anecdotal evidence on the regulatory burden associated with superannuation for WHMs.
One respondent described it as taking about three hours to process superannuation details for each new worker.
According to the WHM visa review, Australia is the only country that requires superannuation to be paid on all earnings.
Guaranteed super, together with the high minimum wage and low tax rates, were considered effective lures for attracting international young people wishing to work and travel.
"The majority of feedback at stakeholder engagement, as well as a large number of submissions, indicated that removing superannuation paid to WHMs was seen as an alternative to raising the tax," the review said.
"These views observed that the role of superannuation was to fund retirement savings, and refunding all superannuation to the government upon exit could be a replacement revenue source.
"Nonetheless, it was suggested that some superannuation is already retained by the government, since it is not claimed by WHMs upon leaving the country.
"Further, other stakeholders noted that superannuation was forced saving out of a given wage, rather than an additional increment to the market wage, and removing this from WHMs was therefore inappropriate."
Not entirely well-received
Queensland federal MP, Bob Katter, called for backpackers' superannuation payments to be removed.
“Why should farmers and hospitality operators have to pay backpackers’ superannuation?" Mr Katter said.
“I don’t want the farmers to have to pay superannuation to a person who is not an Australian resident and who, on average, makes $13,000 a year if they’re lucky.
“This 95pc grab on superannuation is tax by another name."
Greens treasury spokesperson, Senator Peter Whish-Wilson, heavily criticised the new tax rate.
“Scott Morrison is selling rotten eggs to farmers and calling it pavlova. And all the while he wants praise for doing it," Mr Whish-Wilson said.
“The Greens will vote this new tax down when it comes before parliament and we are calling on Labour and the cross-benchers to do the same.
“Rather than penny-pinching from low-paid workers, and putting our agricultural producers at risk, the treasurer should be embarking on real economic reform to raise the billions needed to run our economy."
Victorian Farmers Federation horticulture vice president, Emma Germano, also expressed concern over the question of backpackers' superannuation.
“We were told at the roundtable discussions industry had with government earlier this year, that super was off the table, and not to make any recommendations on this area,” she said.
“But now treasurer Morrison has announced a large-scale reform to super and we would appreciate the chance to respond.
“We have always said that if backpackers want to work in Australia, they need to be taxed like the rest of us but the Government needs to be reasonable in its approach."
